Nike earnings on Tuesday were a mix of good and not so good news, as it posted strong growth in sales in internationals locations, in particular China, but its wholesale revenues continued dropping in North America.
In today’s competitive retail environment, Nike is increasing expenses, favoring more discounts and heavy spending to expand its business of direct to consumer.
On Tuesday, Nike said that it has worked to cut it costs, reporting that general, selling and administrative expenses were down 1% ending its first quarter at $2.9 billion.
The athletic apparel and footwear retailer saw its stock drop over 3% following the close of the market. Shares initially climbed by 3% following the posting of its earnings.
Nike earnings were 57 cents per share, excluding certain times, in comparison to a forecast profit that was 48 cents a share.
Nike revenue reached $9.06 billion, versus estimates that averaged $9.07 billion.
Chief Executive Officer Mark Parker said for the quarter, the company captured new near term opportunities via its new Consumer Direct Offense.
Parker added that looking forward for the remainder of fiscal 2018, Nike will start its next horizon of growth globally through the strength of its brand, the power of its innovative products, and the most digitally-connected consumer experiences every seen in the industry.
Net income for the first quarter at Nike was down to $950 million from over $1.25 billion for the same time one year ago. The drop of 24% in its profit for the quarter was attributed to a decline in gross margin, a higher tax rate and other types of expenses, said Nike.
Revenue for its Nike brand reached $8.6 billion which was up by 2% while sales for its Converse brand reached $483 million which were down by 16% due to declines across North America, said the company.
Nike repurchased over 15.3 million of its share for $849 million in the three-month period, part of its current ongoing buyback program of $12 billion, which it approved two years ago.
Nike’s highest sales were in footwear at $5.5 billion, while revenue for apparel was $2.7 billion during the quarter and equipment revenue reached $420 million.
Nike in June revealed its plans to slash 2% of its worldwide workforce, trimming its segment geographically to four from six.
Nike’s best international segment was Great China with $1.1 billion in sale or an increase of 9% from the same period one year ago, while sales in North America were down 3% to $3.9 billion, which weighed on the overall results of the company.